On 28 July 2025, the European Central Bank (ECB) updated its guide to internal models.
The updated guide includes a new section on machine learning which specifies expectations for using machine learning techniques in internal models. The chapter on credit risk has also been updated which includes clarifications of the responsibilities of senior management and the management body regarding the readiness for submission to the ECB of applications concerning internal models. The topic of market risk is now split into two chapters to present supervisory expectations for market risk models under both the Capital Requirements Regulation (CRR) 2 and CRR3, reflecting the European Commission’s decisions to delay the implementation of legislation on the new Basel standards. In addition, the chapter on counterparty credit risk includes more detail on how to model the risks of trades with partners, changes in exposure and updates on maturity in line with CRR3.